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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Mylan NV was -0.50. The lowest was -4.39. And the median was -2.48.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Mylan NV for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.9305||+||0.528 * 1.0638||+||0.404 * 1.1847||+||0.892 * 1.1417||+||0.115 * 0.8292|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0387||+||4.679 * -0.0485||-||0.327 * 1.2784|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $3,099 Mil.|
Revenue was 3057.1 + 2560.7 + 2191.3 + 2490.7 = $10,300 Mil.
Gross Profit was 1283.3 + 1171.7 + 907 + 1062.6 = $4,425 Mil.
Total Current Assets was $7,965 Mil.
Total Assets was $36,539 Mil.
Property, Plant and Equipment(Net PPE) was $2,284 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,387 Mil.
Selling, General & Admin. Expense(SGA) was $2,384 Mil.
Total Current Liabilities was $9,554 Mil.
Long-Term Debt was $11,329 Mil.
Net Income was -119.8 + 168.4 + 13.9 + 194.6 = $257 Mil.
Non Operating Income was -50.2 + -117.5 + -16.3 + -134.7 = $-319 Mil.
Cash Flow from Operations was 1200.6 + 416.6 + 80.5 + 652 = $2,350 Mil.
|Accounts Receivable was $2,917 Mil.
Revenue was 2695.2 + 2371.7 + 1871.7 + 2082.7 = $9,021 Mil.
Gross Profit was 1315.3 + 1008.1 + 830.1 + 969 = $4,123 Mil.
Total Current Assets was $6,486 Mil.
Total Assets was $21,317 Mil.
Property, Plant and Equipment(Net PPE) was $1,885 Mil.
Depreciation, Depletion and Amortization(DDA) was $860 Mil.
Selling, General & Admin. Expense(SGA) was $2,010 Mil.
Total Current Liabilities was $3,684 Mil.
Long-Term Debt was $5,846 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(3098.9 / 10299.8)||/||(2917.1 / 9021.3)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(4122.5 / 9021.3)||/||(4424.6 / 10299.8)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (7965.1 + 2284.2) / 36538.5)||/||(1 - (6485.9 + 1884.7) / 21316.5)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(859.9 / (859.9 + 1884.7))||/||(1387.1 / (1387.1 + 2284.2))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(2383.8 / 10299.8)||/||(2010.1 / 9021.3)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((11328.6 + 9554) / 36538.5)||/||((5845.8 + 3684.1) / 21316.5)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(257.1 - -318.7||-||2349.7)||/||36538.5|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Mylan NV has a M-score of -2.65 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Mylan NV Annual Data
Mylan NV Quarterly Data